STATE OF SOUTH CAROLINA
DEPARTMENT OF REVENUE
COMPOSITE FILING INSTRUCTIONS
SC1040 Composite Filing For S Corporations, Partnerships, And
Limited Liability Companies
A. What is a composite return? A composite return is a single return filed by a partnership, S-corporation, or Limited
Liability Company (LLC) taxed as a partnership or S-corporation on behalf of two or more nonresident individuals, trusts
or estates who are partners, shareholders of the S-corporation or members of the LLC. A composite return allows
S-corporations or partnerships to compute and report the SC income and tax attributable to electing nonresident
shareholders or partners on a single tax return. A composite return is filed using an SC1040 SC Individual Income Tax
B. When is a composite return due? The return is due on or before the 15th day of the 4th month following the
shareholders’, partners’ or members’ taxable year end. Any tax due is paid along with filing the return. The S
corporation, partnership, or LLC does not need to withhold on behalf of any shareholder, partner, or member participating
in a composite return. Shareholders, partners, and members participating in a composite return do not need to pay
estimated tax. In order to extend the time allowed for filing a composite return, file SC4868 using the name and FEIN of
the S corporation, partnership, or LLC. Do NOT use SC1120T or SC8736 to extend the composite return. The tax
due must be estimated and paid along with filing the extension on or before the 15th day of the 4th month following the
end of the shareholders’, partners’, or members’ taxable year.
C. How is a composite return completed? The heading of the composite return states the name, address and Federal
Employer Identification Number (FEIN) of the S corporation, partnership, or LLC. There is no need to use "Composite
Return for" or "Shareholders/Partners/Members of" in the name. Mark the box for filing a composite return. Mark
"Single" filing status and one exemption on the face of SC1040.
A partnership, S-corporation, or LLC taxed as a partnership or S-corporation must compute the tax separately on each
participant's share of income and add the tax together to arrive at the total tax due.
The methods available depend on whether the partner, shareholder or member has filed an I-338 Composite
Return Affidavit with the department through the partnership, S-corporation or LLC. An I-338 affidavit states that
the partner, shareholder or member has no other income taxable to South Carolina. For additional information see
If a partner, shareholder or member completes an I-338 affidavit, the composite return can either prorate the
standard deduction or itemized deductions and personal exemptions for each participant or not include them.
If a partner, shareholder or member does not provide an I-338 affidavit, the composite return must not include any
personal deductions or exemptions, and must tax active trade or business income at the active trade or business
income rate (5% for tax years after 2008) and all other income at 7%.
For tax years beginning after 2004, nonresident shareholders and partners may participate in composite returns
even if they have other sources of income taxable to South Carolina. Disregard the other sources of income
taxable to South Carolina when preparing the composite return.
The composite return must be signed by an authorized partner, an authorized officer of the S-corporation, or an
authorized member of the LLC. Attach a schedule showing the separate computations. Total the separate tax
amounts and enter on the "tax" line of the SC1040.
Nonresident fiduciaries and individuals who are shareholders or partners may participate in the filing. All
participating must have the same tax year.
D. Where can I find more detailed information? See SC Revenue Procedure #92-5 on our website: